Asset class impacts fee pricing resilience

Jonathan Boyd
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Asset class impacts fee pricing resilience

Research published by bfinance suggests that asset class type can affect the pricing resiliency of management fees.

In its report - Investment Management Fees: Is Competition Working - bfinance cites fees quoted for real mandates, to identify the fee compression ongoing in the industry.

Factors noted include the rise of cheaper competitors, increasing transparency on costs and expansion of the manager universe. 

However, bfinance also stresses that while price competition in the industry is relatively inefficient, investors should not be chasing low cost at any cost, but that net returns are the priority.

Fees for global equity mandates are down 7% since 2013, and 4% since 2016. Median quoted fees for a $100m mandate are at 55bps.

For global emerging market equities, fees are down 13% since 2013, with the media quoted fee at 74bps.

Emerging market debt has seen media fees drop 10%.

Fund of hedge fund fees slipped to 58bps in the 12 months to June 2019. 

By contrast, bfinance notes that managers in private markets have been under less pricing pressure, because of a strong fundraising climate relative to those managing assets in public markets.

The full paper can be accessed here: https://www.bfinance.com/insights/investment-management-fees/

 

Jonathan Boyd
Author spotlight

Jonathan Boyd

Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope.